Don't Panic: There's Time To Get ObamaCare Replacement Right

U.S. District Judge Reed O’Connor’s decision striking down ObamaCare provides an opportunity for states to begin solving the mess Washington has created in their health insurance markets.

My colleague Doug Badger writes that the decision gives states “new space to create policies that benefit their own residents—the sick, the healthy, and the poor. Congress should resist the urge to act in haste.”

The left is, of course, having a meltdown over Judge O’Connor’s solidly-argued decision because he ruled that the individual mandate and therefore the law are invalid. After Congress reduced the penalty to $0 for not having health insurance, “the Individual Mandate is no longer fairly readable as an exercise of Congress’ Tax Power and continues to be unsustainable under Congress’ Interstate Commerce Power,” he wrote.

Judge O’Connor based his decision on Chief Justice John Roberts’ own arguments, saying the Supreme Court and the Congress both said on numerous occasions the individual mandate was “essential,” a “keystone” in the structure of the law. They argued that the mandate to purchase coverage was integral to the law’s provisions requiring health insurance companies to sell policies to all comers (guaranteed issue) and allowing sick people to pay the same premiums as the healthy (community rating).

The majority decision in the 2012 Supreme Court verdict in NFIB v. Sebelius upholding the law said that without the individual mandate, the guaranteed-issue and community-rating provisions “could not work” because the provisions “are closely intertwined.” O’Connor cited studies showing that states that tried the latter two alone had disastrous results, therefore concluding that the law cannot work without the individual mandate.

We already know that the Supreme Court was willing to employ “somersaults of statutory interpretation” to save Obamacare, to quote the late Justice Antonin Scalia. They could do the same again when Texas v. Azar reaches the Supreme Court unless the court sees that there is a solution to make sure millions of people are not thrown off coverage.

Our Health Policy Consensus Group has been working for a year on just that solution. The Health Care Choices Plan we developed would help the millions of people who are struggling to afford health insurance, particularly in the small group and individual markets, to have access to more choices of more affordable insurance while protecting the poor and the sick.

It is based upon formula grants to the states, using existing Obamacare resources, but with guidelines that incentivize states to provide people with more choices of more affordable coverage and even provide an escape hatch for people on Medicaid and CHIP to get better private coverage. It provides generous resources for those needing help in purchasing coverage and better protections for those with expensive and chronic illnesses.

An analysis by the Center for Health and Economy has shown the plan would reduce premiums by one third while keeping coverage numbers level.

Unlike the ACA, the Health Care Choices plan has money dedicated to creating guaranteed protection programs. States that have used early waiver authority to create these programs have seen in many cases dramatic results with no new federal spending.

Badger and Heritage scholar Ed Haislmaier explain how early targeted waivers granted to states help them better manage patients with chronic and pre-existing conditions. “Several states have successfully used a waiver to change market conditions sufficiently that premiums fell for individual health insurance while still protecting the ability of people with high health care costs to access care,” they write.

Healthy people need more affordable coverage, and people who have health challenges need protections to make sure they can get health insurance. This was true before Judge O’Connor’s decision and it remains true now.

The Centers for Medicare and Medicaid services issued in October new guidance for states to escape Obamacare’s straightjacket through state innovation authority in the ACA. CMS’s new Section 1332 guidance allows states to help create their own programs to help their individual and small group markets heal from the damage that Obamacare has done.

The more we can show success in the near term, the easier it will be for the courts to provide a path for Congress to return resources and authority to the states through legislation rather than requiring states to go through the waiver process.

“Guaranteed protection programs” will be key for state policymakers to effectively demonstrate they have a better plan than ObamaCare to protect those with pre-existing conditions.

The Wall Street Journal opined today in Texas ObamaCare Blunder that the court decision could backfire with Congress and states hastily passing legislation to prop up the law. They warn, “This is what happens when conservatives fall into the liberal trap of thinking they can use the courts to achieve policy goals that need to be won in Congress.”

But conservatives have a plan to return authority and resources to the states. It is vital that states take advantage of this flexibility to show proof of concept, just as states did when they took the lead on welfare reform in the 1990's.

The Trump administration today issued a statement saying it “stands ready to work with Congress on policy solutions that will deliver more insurance choices, better healthcare, and lower costs while continuing to protect individuals with pre-existing conditions.”

White House Press Secretary Sarah Sanders earlier assured people they will be protected in the meantime: “Obamacare has been struck down by a highly respected judge. The judge’s decision vindicates President Trump’s position that Obamacare is unconstitutional. Once again, the President calls on Congress to replace Obamacare and act to protect people with preexisting conditions and provide Americans with quality affordable healthcare. We expect this ruling will be appealed to the Supreme Court. Pending the appeal process, the law remains in place.”

That gives states time to act and show their leadership in creating health reform programs tailored to give their citizens better options for more affordable care and coverage.

—Grace-Marie Turner is the president of the Galen Institute, a non-profit research organization focusing on patient-centered health reform.